Foreign Direct Investment (FDI) in Myanmar will take a hit if European Union (EU) removes Generalised Scheme of Preferences (GSP) privileges to Myanmar

Foreign direct investments (FDI) will suffer a blow if the EU withdraws its Generalised Scheme of Preferences (GSP), under which Myanmar enjoys easy trade access to the world’s largest trading block.

EU FDI in Myanmar as well as FDI from countries which target the EU market through the country could take a hit should the EU cancel its GSP privileges to Myanmar, said U Aung Naing Oo, Director General from Directorate of Investment and Company Administration (DICA).

The EU is considering removing the GSP due to the ongoing crisis in northern Rakhine. Last week, an EU monitoring mission visited Myanmar to meet with government officials, businesses and labour associations as part of it decision making.

As a whole, FDI from the EU accounts for 10pc of total FDI to Myanmar. Most of the funds are channeled into the garment manufacturing sector. Myanmar exports almost half its garment products to the EU. 

Other countries invest in the Myanmar garment sector to capture a slice of the EU’s rising demand for domestically produced textiles, clothing and footwear. 

Currently, foreigners dominate 65pc of the Myanmar garment industry, while citizens own the remaining 35pc of garment factories in the country. 

Of the foreign-owned factories, around 60pc is run by the Chinese, which then exports to the EU,  according to Myanmar Garment Manufacturer Association (MGMA). 

All that could take a hit if the GSP is removed, U Aung Naing Oo said. Before this, Myanmar was expected to draw FDI totaling US$5.8 billion this fiscal year, according to DICA.

In addition, the garment manufacturing industry employs close to half a million workers, at least 75pc of which could lose their jobs if the EU blocks Myanmar’s access to its market. 

“Myanmar is currently undergoing political reform towards democracy and part of that process is alleviating poverty levels in the country. If people lose their jobs, it will delay our reforms. We hope the EU will reconsider its intentions,” he said.

(The Myanmar Times: https://www.mmtimes.com/news/fdi-will-take-hit-if-eu-removes-gsp-dica.html )

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